Wednesday, September 14, 2011

What's the Real Goal of the 'Infrastructure Bank'? (GE)

And here I thought it was just about funneling contracts to General Electric.*
[you are such a naïf -ed]

From Reuters' MuniLand blog:

The Infrastructure Privatization Bank

The first time many heard about the United States creating a
infrastructure bank was in President Obama’s Thursday speech, but the
idea has actually been floating around Congress for a number of years.
Former U.S. Senator Chris Dodd of Connecticut proposed the idea in 2007
with inauspicious timing. From the American Water Works Association:

In an eerie coincidence, legislation to create a National
Infrastructure Bank to address the need for financing of infrastructure
projects was introduced with bipartisan support in the US Senate the
same day a bridge collapsed in Minneapolis.

I think there is some misunderstanding though about the purpose of
the proposed infrastructure bank. On the surface it appears to be an
alternative source of funding for common transportation, water and
energy projects. But its real purpose seems to be a means of spurring a
large infrastructure privatization movement in the United States.

Senate Resolution 652,
sponsored by Senator Kerry of Massachusetts, would create the American
Infrastructure Financing Authority. The AIFA would require that funded
projects generate revenues to repay the loan to the infrastructure bank.
For the Minneapolis bridge project to be funded it would have needed to
be a toll bridge rather than a free bridge (or have a government entity
repay the loan). It’s a PayGo Infrastructure Bank.

Currently almost all American infrastructure is funded either through
municipal bonds or federal funding. Even as federal funding has been
constrained, municipal bond issuance has been very low this year,
running at about half of last year’s rate. There is plenty of capacity
to fund infrastructure with municipal bonds. From a funding standpoint
it’s not clear why we need an infrastructure bank, especially a paygo
infrastructure bank.
The AIFA legislation is very specific about the type of projects that can be funded:

Highway or road

Bridge

Mass transit

Inland waterways

Commercial ports

Airports

Air traffic control systems

Passenger rail, including high-speed rail

Freight rail systems

The legislation seems to require public-private partnerships for
funding. In the bill’s criteria for loan approval, there’s a preference
for those projects which maximize private investment (page 41):

“the extent to which the provision of assistance by AIFA
maximizes the level of private investment in the infrastructure project
or supports a public-private partnership, while providing a significant
public benefit”

Conceivably Warren Buffett’s Burlington Northern Santa Fe railroad
could team up with a small municipality and receive below-market loans
to fund improvement of their rail systems. There is a lot of gray area
defining “public good” in the legislation and this makes way for many
projects that might have a larger private component....MORE

Have you wondered why the multinationals are pushing to get their cash back to the United States?
Because it is the best of the bad options.
Do you think that G.E. wants to have billions in cash in Communist China?
Or that Google wants billions in Ireland, gang-raped by the bankers and politicians and desperate for revenue?

They are terrified that they won't be able to repatriate but at the same time don't want to pay any tax on the money.
So they gussie the idea in the cloak of "jobs" or "infrastructure",
anything to get the politicians on board to help them get their loot
back under the rule of law....